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Prepared Remarks:

Operator

Good day and welcome to the New Jersey Resources' Fourth Quarter Fiscal 2017 Earnings Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the * key followed by 0. After today's presentation there will be an opportunity to ask questions. To ask a question, you may press * then 1 on your touchtone phone. To withdraw your question, please press * then 2. Please note this event is being recorded.

I would now like to turn the conference over to Dennis Puma, Director of Investor Relations. Please go ahead.

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Dennis Puma -- Director of Investor Relations

Thank you, Nicole, and good morning everybody. Welcome to New Jersey Resources' Fourth Quarter Fiscal 2017 conference call and webcast. I'm joined here today by Larry Downes, our Chairman and CEO; Steve Westhoven, our Executive Vice President and COO; Pat Migliaccio our Senior Vice President and Chief Financial Officer; as well as other members of our senior management team.

As you know, certain statements in today's call contain estimates and other forward-looking statements within the meaning of the securities laws. We wish to caution listeners of the call that our current expectations, assumptions, and beliefs forming the basis for our forward-looking statements include many factors that are beyond our ability to control or estimate precisely, which could cause results to materially differ from our expectations as found on Slide 2.

These items can be found in the forward-looking statements section of today news release furnished on Form 8-K and in our most recent Forms 10-K and Qs filed with the SEC.

We do not by including these statements assume any obligation to review or revise any forward-looking statement referenced here in light of future events.

Turning to Slide 3, we will be referring to certain non-GAAP measures such as net financial earnings or NFE. We believe that NFE provides a more complete understanding of our financial performance. However, NFE is not intended to be substitute for GAAP. Our non-GAAP financial measures are discussed more fully in Item 7 of our 10-K. I would also like to point out that the slides accompanying today's presentation which are available on our website and are also furnished on our Form 8-K this morning.

With that said, I would like to turn the call over to our Chairman and CEO, Larry Downes. Larry?

Larry Downes -- Chairman, President, and Chief Executive Officer

Thanks, Dennis, and good morning, everyone. As I begin this morning, I wanted to congratulate Steve Westhoven on his recent promotion to Executive Vice President and Chief Operating Officer of New Jersey Resources. I think many of you know Steve but, for almost three decades now, he's been a valuable member of the team. He's made significant contributions to the company, particularly on the development of our successful Wholesale Energy and Midstream strategies and I am confident that he will continue to deliver results for our customers, our share owners, and all of our stakeholders.

As you know from our news release this morning, we reported another strong fiscal year, thanks to the performance of our employees and their hard work, their focus, and their dedication. As we look at Slide 4, we reported net financial earnings, or NFE, of $1.73 per share for Fiscal 2017 and that compared with $1.61 per share last year and represented a very strong growth rate of 7.5%.

Our results were in line with financial community expectations and our stated guidance range of $1.65 to $1.75 per share. I would also point out that the results from each of our businesses were within the ranges that we had provided to you at the beginning of the fiscal year.

Consistent with our plans, New Jersey Natural Gas once again had a very strong year and drove our financial results. Higher utility base rates and record customer additions led to a 14.2% earnings growth rate over the prior year.

Demand for solar continues to grow in New Jersey and we remain well-positioned strategically in this market. Our Clean Energy business, NJR Clean Energy Ventures, has become one of the largest residential solar providers in New Jersey. This year, we also placed five commercial solar projects into service and our solar portfolio now includes almost 190 megawatts.

During the fiscal year, NJR Energy Services acquired natural gas transportation, storage, and supply agreements with large industrial customers from Talen Energy for $55.7 million. This acquisition will support our Wholesale Energy Services strategy, which is to provide physical natural gas services to customers across North America.

Our strong financial profile and performance allowed us to increase our annual dividend rate by 6.9% and to provide our shareowners with a total return of nearly 32%. As we plan for future growth, we made progress on our key infrastructure projects, including our Southern Reliability Link, mutual strength in our system, ensuring safe, resilient, and reliable service for our customers.

Moving to Slide 5, earlier this year, we increased our dividend by 6.9%, which represented the 24th increase in our dividend in the last 22 years. Our dividend strategy targets an annual growth rate between 6% and 8% with a payout ratio of 60% to 65%. We believe that this approach will provide a competitive current return to shareholders, while reinvesting earnings in the company to support future NFE growth.

Turning to Slide 6, as we look to Fiscal 2018, this morning, we announced an NFE guidance range of $1.75 to $1.85 per share. Our longer-term NFE per share goal remains in the 5% to 9% range.

On November 7th, Phil Murphy won the gubernatorial race here in New Jersey. During his campaign, Governor-Elect Murphy stated his intentions to make New Jersey a national leader in solar energy production and job creation and we look forward to working with his administration to help realize that vision.

Just after the end of the fiscal year, we signed an agreement with Talen Generation to acquire an existing pipeline in southeastern Pennsylvania. This project involved converting an oil pipeline to natural gas to serve customers in the greater Philadelphia region. The investment is consistent with our strategy and is expected to benefit both customers and shareowners.

As you look at Slide 7, you can see we give a breakdown of the expected NFE contributions from each of our businesses in Fiscal 2018. New Jersey Natural Gas will continue to provide the majority of our earnings. Customer growth and infrastructure investments remain the principal earnings drivers.

We anticipate that NJR Midstream will contribute between 5% and 15% of NFE, which will be driven by the performance of our existing assets and recording of allowance for funds used during construction or AFUDC from PennEast.

In total, our regulated businesses -- New Jersey Natural Gas and NJR Midstream -- are currently expected to contribute 55% to 75% of the NFE in Fiscal 2018. We expect that NJR Clean Energy Ventures will contribute between 20% and 30% of NFE this fiscal year. And, finally, we expect NJRES to perform within our guidance range and contribute between 5% and 10% of NFE this year.

All in all, the performance of our portfolio is meeting our expectations and we expect another strong performance in Fiscal 2018.

Thanks, Larry, and good morning, everyone. I'd like to begin by discussing our Midstream business and recent announcement regarding our Adelphia Pipeline acquisition on Slide 8. Shortly after the end of the fiscal year, we signed an agreement to acquire an 84-mile, 18-inch pipeline which runs from Marcus Hook, Pennsylvania to south of Philadelphia, north to Martins Creek Pennsylvania for $156 million.

At the same time, we an open season for the Adelphia Gateway Pipeline. NJR Midstream intends to convert the 50-mile southern section of the pipeline to a natural gas-only line and will bring the pipeline system under their jurisdiction under the new name, Adelphia Gateway. Capital costs for the acquisition are expected to be in the $80 to $130 million range.

Today, the Philadelphia market is constrained with limited access to affordable energy services. Adelphia Gateway will serve this need, fueling economic growth and job creation as businesses and manufacturers expand their operations.

The project will have minimal impact on the environment because the pipe is already in the ground. The conversion process to natural gas involves minimal construction and utilizes ground field locations in existing rights-of-way. We expect the project to be in service in 2019 and to contribute to earnings in 2020.

Our other Midstream pipeline project, PennEast, is expected to construct a120-mile, berth-regulated, interstate natural gas pipeline system that will extend from northern Pennsylvania to western New Jersey and is estimated to be completed and operational in 2019. PennEast is currently awaiting a birth certificate to move the project forward.

Turning to Slide 9, New Jersey Natural Gas once again provided the majority of their earnings this year due to higher base rates, customer growth, and infrastructure investments. During Fiscal Year 2017, we added over 9,000 new customers, representing an increase of nearly 12% over last year. These new customers will add about $5.5 million annually to utility gross margin. We expect that growth to continue and will spend approximately $120 million over the next three years and add up to 28,000 new customers. This equates to a growth rate of 1.7%. About 60% of that growth will come from new construction and 40% will come from conversions to natural gas from other fuels.

Our BT unit-produced infrastructure programs including SAFE II and New Jersey Rise ensure the safety and reliability of our system, while providing current returns on our investment capital. The SaveGreen has helped our customers make energy efficiency upgrades to their homes and businesses. Since 2009, we have invested nearly $150 million in SaveGreen and these investments are authorized to earn return on equity that ranges from 9 and 3/4 to 10 and 23%. Our BTSS incentive programs have saved our customers nearly $944 million over the life of the programs, while contributing to an average of $0.05 per share annually to New Jersey's Natural Gas's earnings.

Turning to Slide 10, as you know, we have a strategy of finishing our SREC inventory to lock in revenue for future energy years. Results of this strategy are shown on Slide 10. You can see on the charts that nearly all of our SREC sales and facilities, currently operational and under construction, are hedged for Energy Year 2018 at an average price of $222 per SREC and we will continue to hedge through Fiscal '18. Energy Year 2019 and 2020 hedging percentages should continue to rise along with prices as the market becomes more active to satisfy mandated clean energy requirements.

Now I'll turn the call over to Pat for some details on the numbers.

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

Thank you, Steve, and good morning, everyone. This morning, we will put a fourth quarter NFE loss of $12.5 million or $0.14 per share compared to the loss of $2.1 million or $0.02 per share in the same period last year. For the year, we reported NFE of $149.4 million or $1.73 per share compared to $138 million or $1.61 per share of last year.

In Slide 11, you can see the drivers in the quarterly decline and the improvement in our annual results. For the fourth quarter, higher owning expenses resulted in lower quarterly contribution from New Jersey Natural Gas. However, for the year, higher base rates and customer growth led to a $10.8 improvement for New Jersey Natural Gas.

Both our quarterly and fiscal 2017 results continue to benefit from AFUDC equity in PennEast, which, as is our Midstream, is a 20% owner. We began recognizing AFUDC in the second quarter and have recorded approximately $3.6 million for the year. Results at NJRCEV were lower on both the quarterly and annual basis as a result of failing spec financial arrangements executed in the fourth fiscal quarter of 2017. Finally, results at NJRS were higher for the quarter as compared to the prior year, but market was lower for the full year, which was in line with our expectations.

Turning to Slide 12, I'd like to review our recent solar sale leaseback transactions. Under this type of financing arrangement, we retain effective ownership of the solar projects because we still have all the revenue streams, including SRECS, and also responsibility for the operation and maintenance of the asset.

We are, however, surrendering our rights to the investment tax credit and bonus depreciation. Since we're not a cash tax payer for several years, this transaction structure creates additional economic value for us and assists managing our tax credit carrying forward. Under this structure, there is no upfront earnings impact from the ITC -- rather, the value associated with the tax benefits is captured over time through the terms of the lease.

Slide 13 brings together our capital plan for NJR for the next several years. As you can see, our investment in New Jersey Natural Gas approximates over $1 billion from Fiscal 2018 through 2021. Also, we plan to invest approximately $0.5 billion in Midstream over the next few years on our PennEast and Adelphia Gateway projects.

The other item I'd like to highlight is our solar spending. We're estimating our residential solar customer growth rate will be between 8% and 10% in Fiscal 2018, resulting in approximately $42 of capital investment. We also have four new commercial solar installations, some of which we currently estimate will be financed through the sale and spec structure.

Moving to Slide 14, you can see that our capital plan is anchored by strong cash flow from operations, as well as our dividend reinvestment program to help finance our capital reinvestment and dividend growth targets.

The balance will come from the issuance of approximately $250 million of equity over the next two fiscal years and also long-term debt. As we do this, we remain mindful of maintaining our current credit ratings and believe our cash flows and financing plans will continue to support our strong financial profile now and in the future.

Before I turn the call back to Larry, I thought I'd cover the effect of any changes to corporate tax rates on Slide 15. For New Jersey Natural Gas, a lower corporate tax rate would result in lower bills for our customers. The current versions of the House and Senate tax reform bills exclude the utilities industry from bonus depreciation and limits on interest deductibility, thereby mitigating most of the potential downside risk from tax reform.

For non-regulated businesses, we would see a large, one-time benefit as we're remeasuring net-deferred tax liabilities associated with our clean energy investments and an ongoing benefit from a lower corporate tax rate. The lower corporate tax rate would result in a slightly longer time for us to use our tax credits, but would not likely result in a material change to our planned investments. That said, it is early in the process. As the status of any tax reform package becomes clearer, we'll continue to update you on a position and future actions. We'll now turn the call back to Larry for some final thoughts.

Larry Downes -- Chairman, President, and Chief Executive Officer

Thank you, Pat. Before we open up the call for questions, I want to summarize the key elements of our plan to create long-term shareowner value. Looking at Slide 16, we illustrate our accomplishments in Fiscal 2017 as well as our path to future growth. We continue to believe this path will support our long-term growth targets and provide solid returns for our shareowners.

We've spent the last decade building a portfolio of energy infrastructure assets to help meet current and future energy demand and we have used our knowledge of energy markets to offer services that help both large and small customers manage their energy needs.

Our primary strategy is to invest in natural gas and clean energy, the two fastest growing areas of our nation's energy supply, and we will continue to provide energy efficiency programs that help our customers use less energy and save money. As the demand for clean, domestic, affordable energy continues to grow, natural gas and clean energy will play leading rolls in our future supply mix. Our infrastructure investments are aligned with this opportunity. Also, as advances in technology make natural gas production more accessible and efficient and as natural gas demand continues to reach record levels, we are investing in natural gas infrastructure to meet customer needs.

Our solar investments will advance this transition to a cleaner energy future supported by state and federal policies, declining costs, and growing customer demand. Clean energy is currently projected to grow to 20% of our nation's energy mix by 2040. We believe that energy efficiency is another important part of our NJ future. With new technologies, building codes, and energy appliance standards, along with an increase interest in decreasing emissions and lowering energy bills, the focus on energy efficiency continues to grow. We believe that energy efficiency benefits all of our stakeholders, including customers and investors and it's the least cost alternative for saving money and improving the environment.

We continue to be leaders and innovators in the energy efficiency space for customers who are increasingly interested in saving energy. Our collaborative relationships with our regulators has been a key element in our ability to advance energy efficiency in New Jersey. To achieve our long-term NFE growth targets, we will maintain a disciplined capital allocations strategy that is focused on achieving an appropriate risk-adjusted cost of capital. We will also maintain a strong and efficient financial profile that will provide access to external capital as needed.

So, before we go to questions, I want to say thank you, as always, to the outstanding work of our more than 1,000 employees. These dedicated women and men are the foundation of our company and the driving force behind all we do and the results that we're are reporting today has been achieved through their commitment to excellence and their passion for serving our customers every day. So, I want to say thank you to everyone joining us today. Have a wonderful Thanksgiving and we would now welcome your questions.

Questions and Answers:

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press * then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To extract your question, please press * then 2.

Hey, good morning, guys. Thanks for taking the call. Hopefully, a couple of quick ones from me. Pat, perhaps, first to you: how quickly can the sale leaseback agreement be the standard for the new solar operations? Will we see a 50/50 split between sale leasebacks and ITC-eligible stuff or is that, perhaps, too quickly to make that shift?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

So, Spencer, in our long-term capital plan, we included an estimate of what we expect to sell leaseback finance in both 2018 and 2019 today. The sale leaseback structure, we actually have 90 days after the commercial operation under the asset before it goes into service to execute that and so it provides us this flexibility to wrap that up during the course of the year if other businesses of ours are performing better than expected.

Spencer Joyce -- Hilliard Lyons -- Research Analyst

Okay. That's very helpful. Also, sticking with the sale leaseback item, correct me where I'm wrong here, but was there a negative contribution from ITC, specifically, the fourth quarter, perhaps, as we adjust the earlier quarters for the sale leasebacks, we saw in Q4 or is my math just off there?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

No, I think that's accurate. Unfortunately, we have to estimate a future tax rate and take into consideration future investment tax credits so the fact that we did not record the investment tax credits on the Pemberton 2 and Princeton solar projects in the fourth quarter resulted in the negative ITC adjustment, if you will.

Spencer Joyce -- Hilliard Lyons -- Research Analyst

Oh, OK.

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

But I think the important number to look at is the year-on-year comps.

Spencer Joyce -- Hilliard Lyons -- Research Analyst

Okay. Great. Great. I just wanted to make sure I wasn't losing my mind here around the holidays. So, versus the 296 NFE ITC comp for 2017, what's the comparable 2016 number -- slightly less than that, right?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

Yeah, the CapEx that I have right in front of me is 85, roughly, for this year and it was 87 last year so minus decline year-on-year.

Spencer Joyce -- Hilliard Lyons -- Research Analyst

Okay, perfect. One question, perhaps, Steve, to you for a second. First of all, congrats on the promotion. Welcome to the calls, here. And you made a short comment about, perhaps, warming SRECS as we look over the 2019, 2020 years. Was that more of a qualitative assertion about support for clean energy from the new governor there or was that a comment, perhaps, on simply the structural dynamics of the way the curves are structured and the way that those in-use customers buy those SRECS?

Well, I guess you could answer that as probably a yes for both. I would imagine that the two are somewhat joint. Certainly, our new governor has expressed some lofty clean energy goals so I think that that has been somehow seen in the marketplace and, certainly, we've seen some uptick in SREC buying and interest, not only for '19 but also for '20 and that's translated to some increase in prices.

In February, as you remember, there was a BTS auction -- generation-service auction for those load circuit providers who have to buy SRECS in order to complement their load and to adhere to the guidelines of servicing loads within New Jersey so that certainly adds upward pressure to the market. And I think all of these things are coming together so trying not to make predictions on the forward market, but it certainly has some strong support at this point.

Spencer Joyce -- Hilliard Lyons -- Research Analyst

Okay. That's very helpful. Happy Thanksgiving and congrats on the real nice view.

Morning, everyone. Got two questions on the Adelphia Line. First, I'm wondering how you discovered the opportunity. Was that internally sourced or brought to you externally? And then, second, in terms of the size of the line, do you plan to upsize before putting it to service?

Hey, Michael, it's Steve. So, basically, the way that that came about, that asset has been on the market for quite some time and we actually had gone through multiple bidding processes to finally achieve it and win that asset. And, essentially, we were able to identify constraints in the market and we felt that that line would have significant value due to the constraints in the market, specifically, that Philadelphia area -- south of Philadelphia area, industrialized zones so it's very short on gas supply so they need new supply down in that area. So that's what really drove us to pursue this asset in the marketplace.

As far as upsizing goes, we have no plans, at this point, to upsize that asset. That pipeline is already in the ground and it's been tested. We should be able to convert this pipeline with very minimal construction and just some short laterals that need to be put in place to access the market down in the Marcus Hook area. So, at this point, it'll stay an 18-inch pipeline and operate as such.

Michael Gaugler -- Janney Montgomery Scott LLC -- Managing Director

Then, I guess, one final one. Are there any other pipes like that in the area that pique your interest?

Good morning. What drove wind out of the capital plan between the Q3 update and the update today?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

Sarah, we have about $200 million of win investments slated for Fiscal '18 and '19. I think it's fair to say, with the Adelphia Gateway announcement, we're redirecting that capital into a higher return asset with some attractive cash flows. We will also... so wind will shift to a more opportunistic profile over time.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Okay. Got it. And then, relative to the Fiscal Q1 end-service state for SRL, when do you expect to star recovering and earning a return on that investment?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

Well, SRL is currently earning an AFUCD equity on the balance of the spend. The in-service state shifted a little bit for SRL, given the delays we've had in achieving the road opening permits and the ease of assembling means we needed to complete the project, but I would say, not materially moving off from where it was before. We've got Mark in the room -- he might want to follow-up on that, as well.

Larry Downes -- Chairman, President, and Chief Executive Officer

Mark Kahrer just joined us, probably, about six or seven months ago from PS and now leads our regulatory groups so, Mark, why don't you comment on that?

Mark Kahrer -- Vice President Regulatory Affairs

Yeah, we're working with Craig Lynch and the operations to plan out on his construction schedule, when he thinks we'll likely get through this process and then we'll begin starting to plan for the rate cases. It's somewhat of a slide, but we're going to try and think that up as pretty closely as we can as to when it will go in service so there's not any regulatory lag on that asset.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Okay. I thought I saw... is it correct that it will go in service in Fiscal Q1 of '19 and that's also when you'll file the rate case?

Mark Kahrer -- Vice President Regulatory Affairs

We may file before that. I think we have a clear shot at being able to get that done and get it in a rate before winter sets in.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Oh, OK. Got it. And is there any plan to seek an accounting order or any special treatment to mitigate the lag between the in-service date and when you can ultimately get that end rate?

Mark Kahrer -- Vice President Regulatory Affairs

I think we'd like to but the infrastructure clauses that would do that aren't really purposed for that. We'd have to have a conversation with the board to do that.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Okay. And then, on the Adelphia project, will you book AFUDC throughout 2019 or should we expect that earnings contribution to be more in 2020?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

Yeah, Sarah, at this time, we're not expecting any AFUDC equity on that project and it has to do with the fact that a portion of it's already in service and so that presents some challenge getting to the accounting conclusion on AFUDC. If that changes, we'll certainly update it.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Okay. And then last question is just a follow-up to Spencer's question on the ITCs. So, for 2018, of the 180 guidance at the midpoint, what is the EPS contribution from solar tax credits? Or if you just have it on an earnings basis, not on an EPS?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

Yeah, I've got in a capital planning slide. So, we are -- hang on one second, Sarah, sorry, not on top of mind for you right now. Okay. Alright, so, for 2018, we've got roughly $94 million of ITC-eligible solar investment so, times the 24% investment tax credit, you're looking at close to $18, $21 million of investment tax credits in 2018. And then the balance of investment is $43.8 million of sale leaseback solar investment and that'll be recognized over time, too.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Okay. And you said, in 2017, it was close to $30 million so there's a decent delta down into 2018 just because of the...? Is it probably the sale leaseback that's driving the ITC that you're booking down?

Pat Migliaccio -- Senior Vice President and Chief Financial Officer

So, in 2017, our ITC-eligible solar CapEx was $27.5 million and that compares to a $93.5 million in 2018 so you see a slight step up in ITC-eligible solar CapEx. Sale leaseback, you also see a slight increase. We had $33 million this year and it'll be $44 million next year.

Sarah Akers -- Wells Fargo Securities, LLC -- Senior Analyst

Oh, OK. Thank you.

Operator

Again, if you have a question, please press * then 1. We will pause momentarily to assemble our roster.

And, as we have no further questions, I would like to turn the conference back over to Dennis Puma for any closing remarks.

Dennis Puma -- Investor Relations

Okay. Thank you, Nicole. Thanks, everybody, for joining us this morning. As a reminder, a recording of the call is available for replay on our website. We always appreciate your interest in investment in New Jersey Resources. Have a great Thanksgiving. Bye.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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